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Consumer Privacy and Marketing Avoidance

Author

Listed:
  • Il-Horn Hann

    (University of Southern California)

  • Kai-Lung Hui

    (National University of Singapore)

  • Sang-Yong Tom Lee

    (Hanyang University)

  • Ivan Png

    (National University of Singapore)

Abstract

We introduce consumer avoidance into analytical marketing research. We show that consumer efforts to conceal themselves and to deflect marketing have a crucial impact on sellers¡¯ marketing strategy. Under reasonable conditions, seller marketing is a strategic complement with consumer concealment. Hence, consumer measures to conceal themselves from marketing will increase its cost-effectiveness and lead sellers to market more. Policies that encourage consumers to conceal their identities would lead sellers to increase marketing. By contrast, policies that encourage consumers to deflect seller marketing would lead sellers to reduce marketing. Further, there is a clear need for public policy. To the extent of the externality from the sellers to consumers, the equilibrium levels of marketing (chosen by sellers) and concealment and deflection (chosen by consumers) exceed the social optimum.

Suggested Citation

  • Il-Horn Hann & Kai-Lung Hui & Sang-Yong Tom Lee & Ivan Png, 2005. "Consumer Privacy and Marketing Avoidance," Industrial Organization 0503009, EconWPA.
    • Handle: RePEc:wpa:wuwpio:0503009
    Note: Type of Document - pdf; pages: 27
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    File URL: http://econwpa.repec.org/eps/io/papers/0503/0503009.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kai A.Konrad, 2010. "Merger Profitability in Industries with Brand Portfolios and Loyal Customers," Korean Economic Review, Korean Economic Association, vol. 26, pages 5-26.
    2. Kai-Lung Hui & I.P.L. Png, 2005. "The Economics of Privacy," Industrial Organization 0505007, EconWPA, revised 29 Aug 2005.
    3. Simon P. Anderson & André de Palma, 2009. "Information congestion," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 688-709.
    4. Anna D'Annunzio & Antonio Russo, 2017. "Ad Networks, Consumer Tracking, and Privacy," CESifo Working Paper Series 6667, CESifo Group Munich.
    5. Philipp Dimakopoulos & Slobodan Sudaric, 2017. "Privacy and Platform Competition," Working Papers 2017003, Berlin Doctoral Program in Economics and Management Science (BDPEMS).
    6. Chiao, Benjamin & MacKie-Mason, Jeffrey, 2012. "Using uncensored communication channels to divert spam traffic," Information Economics and Policy, Elsevier, vol. 24(3), pages 173-186.
    7. Spiegel, Yossi, 2013. "Commercial software, adware, and consumer privacy," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 702-713.
    8. Khim Yong, Goh & Kai-Lung, Hui & I.P.L., Png, 2008. "Social Interaction, Observational Learning, and Privacy: the "Do Not Call" Registry," MPRA Paper 8225, University Library of Munich, Germany.
    9. Kummer, Michael E. & Schulte, Patrick, 2016. "When private information settles the bill: Money and privacy in Google's market for smartphone applications," ZEW Discussion Papers 16-031, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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    JEL classification:

    • L - Industrial Organization

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